This month marks the 10 year anniversary of the low point in sharemarkets during the GFC. The actual lowest point was achieved on March 9. Our market was down 55% and the Dow Jones was down 53%.
It’s a time many of us would like to forget.
I can very clearly remember this period, and the two years leading up to it.
My eldest daughter was born in May 2007, and it was not long after this that things went pear-shaped for the world, not that I’m saying she was the cause! In fact, that year was the year of the Golden Pig in Chinese astrology and was supposed to be especially propitious and prosperous.
I remember Savannah waking us up in the middle of the night for a feed or to be changed, and me checking the overseas markets on my phone. While this is unremarkable now, it’s easy to forget that iPhones only came out in June 2007.
Sometimes it was pretty difficult to get back to sleep. I’d see that US markets were down, often by a couple of percents but a few times by as much as 7% or 8%.
I’d get a hollow feeling in my stomach knowing the fear that you, my clients would be experiencing when you woke to this news, particularly if you were retired or were getting close to it.
I felt the fear too. I knew our market would drop, a lot, and there was nothing I or anyone else could do about it.
Outside of work, there was a lot going on too. Jenn had stopped working shortly before Savannah was born, so we were down to one income, and on top of that, we’d also bought a bigger home.
Then the GFC hit and my income dropped further, as did the value of my business and our investments. Things were tight.
With all of this going on in the background, I had to face you, my clients, and try to give you confidence that you would be alright provided you didn’t panic. I remember recommending many people keep investing regularly, and where possible, increase the amount they were saving because assets were cheap. Intellectually I knew this was right, but I still had to fight to control my own concerns to give you the confidence to do this.
I’d like to think I made a bit of a difference, but I think also there was a sense of fatalism involved: you realised that everyone was in the same boat and there was not much to be done but hang on for the ride.
Then in February of 2009, my youngest daughter Eliza was born. Now again, I’m not saying there is a link, but the market hit rock bottom a few weeks later, and it’s been going up ever since.
No-one rang a bell to announce it.
Frankly, we were all scared there was more to come.
There was, as the PIIGS of Europe looked set to implode, the US Government had its debt downgraded, China slowed down with serious consequences for mining companies, oil prices spiked slowing the global economy… this list goes on.
Our market has almost doubled since March 9, 2009, but it hasn’t been all smooth sailing as the graph below shows.
But if we look out over 37 years (so we include the 1987 crash), the perspective is somewhat different.
When investment markets movements are reported on daily like sporting scores (they even show ‘winners’ and losers’), it can be hard to take that longer-term perspective.
It can be even harder when you’re in the midst of a crisis like we experienced in 2007-2009.
We don’t know what the future holds, but we need to be prepared for anything and ensure that you are positioned so can still do the things that are most important to you, regardless of what happens.